Nuclear power companies Constellation Energy (CEG.O) and Vistra (VST.N) have emerged as top performers in the S&P 500, trailing only Super Micro and Nvidia. As investors seek opportunities beyond semiconductors, they are increasingly betting on firms supporting the artificial intelligence (AI) boom in various capacities.
This shift in investor focus has propelled shares of Vistra to jump 132% this year, while Constellation Energy has climbed 81%, compared to a 16.7% rise in the benchmark S&P 500 (.SPX). The growing demand for power from data centres, manufacturers, and electric vehicle makers is driving the need for a clean and sustainable energy supply.
Investor sentiment reflects this trend, with Bank of America (BofA) reporting record-high exposure to the sector by “long-only” investors and hedge funds as of June. More than 20% of large-cap funds now hold stock in either Vistra or Constellation, up from 13% at the beginning of the year as per BofA.
This increased interest is partly due to the U.S. government’s encouragement for big tech firms to invest in climate-friendly energy generation, addressing the growing power needs of AI technology. Nuclear energy companies like Constellation and Vistra are expected to benefit significantly from this push.
